WRITTEN QUESTION No. 2984/98 by John McCARTIN Derogations in motor insurance in Ireland (SUPPLEMENTARY ANSWER)
Date: 1998-10-08
Institutions: European Parliament, MCCARTIN
Subjects: Ireland, application of EU law, freedom to provide services, motor vehicle insurance, restriction on competition

29.1.2000

EN

Official Journal of the European Communities

C 27 E/9

(2000/C 27 E/010)

WRITTEN QUESTION E-2984/98

by John McCartin (PPE) to the Commission

(8 October 1998)

Subject: Derogations in motor insurance in Ireland

Will the Commission state whether the Irish market for motor vehicle insurance is affected by any
derogations from EU competition policy or other legislation and can the Commission state when such
derogations come to an end?

Joint supplementary answer
to Written Questions E-2983/98 and E-2984/98
given by Mr Monti on behalf of the Commission

(5 August 1999)

Further to its answer of 4 December 1998 (1),
information.

the Commission has now obtained the following

Motor-vehicle insurance is covered by the third non-life insurance Directive, Council Directive 92/49/EEC
of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct
insurance other than life assurance and amending 73/239/EEC and 88/357/EEC (2) (class 10: third-party
liability), which introduced a single system whereby authorisation, once obtained from the competent
authorities of the home Member State, permits an undertaking to carry on business throughout the entire
Community, under either the right of establishment or the freedom to provide services. The objective of
this system (introduced by Articles 4 and 5 of Directive 92/49/EEC), is to increase competition in national
markets so that consumers can choose the insurance product which suits them best and the insurer they
prefer, irrespective of the company(cid:146)s home Member State.

In practice, however, market realities sometimes prevent
the development of a satisfactory level of
competition. The main problem lies in the differences in premiums set in the various Member States for
third-party liability class. This is not incompatible with Community law because both the criteria used by
insurance companies to set premiums and the number of claims submitted vary from Member State to
Member State. Various factors influence the setting of premiums in each of the Member States and result
in sometimes considerable differences in price.

Firstly, differences between Member States in the level of compensation paid may influence the level of
premiums. The Commission is currently examining the problem with a view to proposing a suitable
solution and possibly submitting a proposal for a directive adjusting the minimum compensation per type
of claim in the third-party liability class, as set out in the second car insurance Directive, Council Directive
84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to
insurance against civil liability in respect of the use of motor vehicles (3). However, this Directive contains
no binding stipulations about the amounts to be paid or the procedures to be followed by the Member
States. The latter may set higher or lower amounts, provided that these are no lower than the minimum
amounts stipulated in the Directive. The fact that some Member States offer a higher level of protection or
have their own methods of assessing claims may lead (cid:129) among other things (cid:129) to higher premiums.

Secondly, the third-generation insurance Directives introduced a single prudential and financial control
system that is applicable by the Member State in which the insurance company is established. However,
the criteria for assessing the financial health of firms are different in each Member State.
It is the
responsibility of the competent authorities of the home Member State to monitor the financial health of
insurance companies, including their state of solvency and the establishment of adequate technical reserves.
Estimates of premiums and other financial resources are intended to cover a company(cid:146)s underwriting
liabilities and solvency margin (Article 7 of Directive 92/49/EEC). The Directives also set out the minimum
standards for technical reserves. The Member State which grants the authorisation may lay down stricter
rules for the insurance companies for which it is responsible (Article 9 of Directive 92/49/EEC).